DHM Markets/Marketers: Jan. 29

Monthly commercial disappearance of milk used in all dairy products has surpassed U.S. dairy farmer milk marketings for the same month for six consecutive months, according to USDA’s monthly Dairy Data report.

Commercial disappearance of milk used in all dairy products during November 2013 totaled 17.72 billion lbs., 5.4% more than November 2012, and about 1.79 billion lbs. more than total U.S. producer milk marketings for the month. Monthly commercial disappearance has surpassed milk marketings since June.

Producer milk marketings for November 2013 totaled 15.93 billion lbs. Adding to available supplies, beginning commercial stocks totaled 12.78 billion lbs., and imports for the month totaled 295 million lbs., for a total of 29.01 billion lbs., the lowest level of the year

At the end of November 2013, ending commercial stocks totaled 11.83 billion lbs., down about 953 million lbs. compared to October 2013, but still about 529 million lbs. more than November 2012.

Source: USDA

CWT assists with 7.4 million lbs. of cheese, butter export sales

Cooperatives Working Together (CWT) accepted 29 requests for export assistance from Bongards Creameries, Dairy Farmers of America, Foremost Farms USA, Maryland Virginia Milk Producers Cooperative Association and Tillamook County Creamery Association to sell 5.758 million lbs. of cheddar, Gouda and Monterey Jack cheese and 551,156 lbs. of butter to customers in Asia, Central America, the Middle East and North Africa. The product will be delivered January through June 2014.

Year-to-date, CWT has assisted member cooperatives in selling 8.494 million lbs. of cheese and 3.542 million lbs. of butter to 12 countries on four continents. These sales are the equivalent of 158 million lbs. of milk on a milkfat basis.

Source: Cooperatives Working Together

NFDM headed for record

While the dramatic increase in cheddar cheese prices are important for the determination of Class III milk prices under federal orders and Class 4b prices under the California system, a similar dramatic story can be told with respect to nonfat dry milk (NFDM) prices, according to Brian Gould, University of Wisconsin-Madison dairy economist.

Since April 2013 there has been a relatively constant increase in NFDM prices. Gould reminds readers that under the FMMO system, the higher of the Advanced Class III and IV prices determines the Class I (beverage milk) base price. The advanced Class IV price has been the mover since March 2013.

Fertilizer costs likely will decline in 2014, providing crop producers with some relief from projected lower crop revenues, according to Gary Schnitkey, University of Illinois ag economist. However, while Illinois fertilizer costs may be down by $60 per acre, lower corn prices may mean crop revenue may be down by more than $300 per acre.

From 2006 to 2013, fertilizer costs rose substantially, increasing by 144% for corn and 161% for soybeans. Since September of 2013, fertilizer prices have declined, likely leading to lower fertilizer costs for into the 2014 production year.

On Jan. 23, 2014, USDA’s Agricultural Marketing Service reported average prices in Illinois of $651/ton for anhydrous ammonia, $521/ton for DAP, and $449/ton for potash. These 2014 prices are below 2013 levels by approximately 27% for anhydrous ammonia, 19% for DAP, and 21% for potash.

While 2014 price declines are large, further downward pressure may exist on fertilizer prices. Additional plant capacity to produce anhydrous ammonia is being placed into operation. Cartel alliances relative to potash have broken up.

Current prices reported by the Agricultural Marketing Service would result in lower fertilizer costs in 2014 as compared to 2013. Using projected price decreases reported above fertilizer costs for corn would be around $140/acre, down $60 per acre from 2012 levels. Fertilizer costs for soybeans in 2014 would be at $50 per acre, down from $68 per acre in 2012. Even with these cost decreases, evaluating the level of fertilizer applications may be advisable, perhaps lowering application rates given recent price changes.

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About the Author:

Dave Natzke

Dave Natzke joined Dairy Herd Management as Editor in January 2014, bringing decades of dairy industry knowledge and experience. Raised on a northeast Wisconsin dairy farm, he previously served as editor/editorial director for another national dairy publication, as well as managing editor for two weekly agricultural newspapers in Wisconsin, adding up to more than 35 years of experience covering agriculture and the dairy industry. As DHM editor, Natzke oversees editorial content for both print and web, supervises full-time and freelance editorial staff, and provides strategic direction. He is based in Wisconsin Rapids, Wis.